Richland-based HAPO joins a growing number of credit unions adding business lending to a service lineup that was once limited to checking and savings accounts, car loans and residential mortgages.

Commercial lending is a relatively small piece of business for credit unions, which in turn accounts for a small fraction of commercial lending handled by traditional banks, both locally and nationally.

The Credit Union National Association reports 38 percent of credit unions in the U.S. offer business services. Their combined loan balances total $70 billion, or 8 percent of their total loan portfolios. The average credit union business loan is $250,000.

In Washington, 41 of the 55 state-chartered credit unions offer “member business lending.” They had $44.1 billion in assets and a combined business lending program totaling $3.5 billion.

Most offer commercial loans on rental properties, according to the Washington Department of Financial Institutions, which regulates the state-chartered credit unions such as HAPO.

Credit unions account for less than one-tenth the business lending undertaken by traditional banks. In Washington, net loans and leases held by traditional banks totaled $45.5 billion at the end of 2016, according to Federal Deposit Insurance Corporation data.

It is nevertheless controversial in the traditional banking world. The American Bankers Association, an industry association representing banks in Washington, D.C., has pushed to revoke the tax-exempt status of credit unions, arguing they’ve strayed from their roots.

“We have reports from our members that they are losing individual loans to the credit unions,” said Brittany Kleinpaste, director of economic policy research. “It is a concern.”

Commercial lending is a relatively small piece of business for credit unions, which in turn accounts for a small fraction of commercial lending handled by traditional banks, both locally and nationally.

HAPO’s move into business lending began in 2015 when it hired Monte Drake, a 30-year commercial banking veteran, to head up the new division as vice president of commercial services.

At the time, HAPO was Washington’s sixth-largest credit union and the largest that didn’t offer business services. The top five — Boeing Employees, Washington State Employees, Spokane Teachers, Numerica and Gesa — all offer business lending services.

Drake said demand from HAPO’s 142,000 members drove the move, along with changing rules governing how credit unions lend to business.

HAPO spent the past year securing state approval to offer business services as well as implementing software, adopting procedures and hiring a small staff.

The commercial lending arm offers business checking accounts, commercial loans, revolving lines of credit, construction loans and other services. HAPO also issues loans backed by the U.S. Small Business Administration. The credit union operates 14 branches in Washington and three in Oregon.

Drake said that while HAPO is interested in issuing larger loans, its primary focus is smaller businesses that are under-served. Its early focus is on converting the personal accounts members may be using to handle small business activities into commercial ones.

It is not focused on any specific industry. However, Drake said that while HAPO can handle agricultural equipment loans, it is not set up for the more sophisticated lending for crop production, which takes extensive monitoring.

Drake acknowledged that HAPO was slow to enter the business lending world.